Competition and concentration in Canadian-U.S. transborder aviation markets

Transportation Journal

Volumn 38, Issue 4, 1999, Pages

  Pustay, Michael W ^a  

^a TEXAS A AND M UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

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EID: 0033149493     PISSN: 00411612     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (17)

1. U.S. Department of Transportation. Secretary's Task Force on Competition in the U.S. Domestic Airline Industry. Washington, D.C.: U.S. Department of Transportation, 1990. See Industry and Route Structure, Vol. 1, pp. 3 and 131.
2. The impact of hubbing on transborder traffic can be very significant. See Martin Dresner, "Hubbing Effects on the Canada-U.S. Transborder Air Market: A Summary," in Louis Le Blanc, editor, Proceedings of the Thirty-fifth Annual Meetings of the Transportation Research Forum. Transportation Research Forum: Arlington, Virginia 1993, pp. 327-331.
3. Kenneth Button, "Liberalising the Canadian Scheduled Aviation Market," Fiscal Studies, Vol. 10 Issue 4 (November 1989), pp. 10-52.
4. David W. Gillen, W.T. Stanbury, and Michael W. Tretheway, "Duopoly in Canada's Airline Industry: Consequences and Policy Issues," Canadian Public Policy, Vol. 14, No. 1 (1988).
5. Michael W. Pustay, "The globalization of the airline industry: The need for a new international policy regime," in M. Kreinin (ed.), Contemporary Issues in Commercial Policy, (Oxford, UK: Pergamon Press, 1995).
6. Tae Hoon Oum and Allison J. Taylor, "Emerging Patterns in Intercontinental Air Linkages and Implications for International Route Allocation Policy," Transportation Journal, Vol. 34, No. 4 (Summer 1995), pp. 21-22.
7. Tae Hoon Oum, W.T. Stanbury, and Michael W. Tretheway, "Airline Deregulation in Canada and Its Economic Effects," Transportation Journal, Summer 1991, pp. 4-22.
8. Minister's Policy Statement No. 248/87, October 5, 1987, as reported in Ministerial Task Force on International Air Policy, Volume III, Recommendations: U.S. trans-border issues, Transport Canada, June 1991.
9. Ira Lewis, "United States-Canada Air Services: The Role of Alliances in a Future Bilateral Agreement," Transportation Journal, Spring 1995, pp. 5-12.
10. Martin Dresner, "The Regulation of U.S.-Canada Air Transportation: Past, Present, and Future," Canadian-American Public Policy, Number 9, March 1992.
11. See Raymon J. Kaduck, Break in Overcast: The Negotiations of the 1995 Canada-US Open Skies Agreement, the Norman Paterson School of International Affairs, Ottawa, Ontario, October 1996 (mimeo), which provides useful information about the progress of these negotiations and important insights into why it took so long to reach an agreement acceptable to both sides.
12. Office of International Aviation, U.S. Department of Transportation, "The Impact of the New US-Canada Aviation Agreement at its First Anniversary," Washington, D.C., mimeo, March 1996. See page titled "Service Highlights."
13. Ira Lewis, "The Emerging Integration of the Canadian and U.S. Airline Industries," Transportation Journal, Spring 1996, pp. 49-54.
14. Code share flights operated by strategic alliance partners were not double-counted. Rather, credit for the flight was allocated to the carrier actually performing the flight. Code share flights operated by affiliated carriers were allocated to the parent. For example, Comair's transborder services are credited to Delta in Tables 1 through 12.
15. In calculating concentration, we ignored the existence of strategic alliances between transborder carriers. (The most important of these alliances are those between Air Canada and United Airlines and between Canadian Airlines and American Airlines.) We have chosen to treat any services offered by alliance partners as independent, for there is little public information regarding the extent of coordination between alliance partners in providing capacity in individual markets. See Tae Hoon Oum, Allison J. Taylor, and Anming Zhang, "Strategic Airline Policy in the Globalizing Airline Networks," Transportation Journal, Spring 1993, pp. 14-30 for a discussion of the role of alliances in airline competition.
16. We focus only on changes at Canadian airports for two reasons. First, reporting changes at U.S. airports becomes cumbersome because of the large number of U.S. transborder gateways. Second, almost all new transborder flights added by U.S.-flag carriers involve service to their U.S. hubs. Accordingly, new transborder services tend to increase the U.S.-flag carrier's dominance at those hubs, and more elaborate analysis is likely to provide little insight beyond this statement.
17. Canadian Airlines' 1997 Annual Report notes at page 10 that its alliance with American Airlines is "the foundation of its transborder and Asian strategy. A priority of this strategy is to codeshare all transborder flights with American Airlines and develop the Vancouver hub."